What is Mudra Loan?

Pradhan Mantri Mudra Yojana is a new scheme under Micro Units Development and Refinance Agency for developing and refinancing activities that are relating to micro units. This scheme was announced while presenting the budget for the 2016 financial year. The main purpose of this loan is to provide funds to non-corporate small business sectors.

What are Micro Units?

Micro units are the small organizations, companies and start-ups in India. The most common observation about the micro units is that they lack funds to financial support their business.

Micro Units Development and Refinance Agency Bank has been set up by the Indian Government to fulfil all the funding needs of the non-corporate small business. The responsibility of Micro Units Development and Refinance Agency Bank is to prepare and launch the policy guidelines and registration and regulation of Micro Finance Institution entities. They are also responsible to run a credit guarantee scheme and create a good architecture to serve micro business by offering financial assistance.

Categories of Pradhan Mantri Mudra Yojana

The micro units are further classified based on their growth stage, development and funding requirements. The three categories are as follows:

Shishu (child) Category:

This category is for the start-ups that have just started out and are looking for loan. Loan cover offered to this category of micro units is Rs.50,000.

Kishor Category:

This is the category where the business has started but it is yet to be established. The loan cover offered to this category ranges from Rs.50,000 to Rs.5 lakh.

Tarun Category:

The business that have started and established themselves fall under this category. The loan might be to expand their business or to buy assets, etc. The loan cover offered to this category ranges from Rs.5 lakh to Rs.10 lakh.

The borrowers must be from the following Non-corporate Small Business Segment:

Proprietorship

Partnership firms

Small manufacturing units

Service sector units

Shopkeepers

Fruit or vegetable vendors

Truck operators

Food service units

Repair shops

Machine operators

Small industries

Food processors

Other industries in rural and urban areas.

The Lender's Eligibility criteria is as Follows

The scheduled commercial banks in public and private sector must have 3 years of continuous track record and their net NPAs not exceeding 3%. To be eligible to lend the loan their minimum net worth is supposed to be Rs.100 crore and not less than 9% of CRAR.

The rural banks must have a net NPA within 3%. To be eligible to lend loan they must also have a profitable operation and must not carry any accumulated losses and CRAR more than 9% CRAR.

Micro Finance Institutions and Small Business Companies are eligible if they fulfil the requirements.

What can Mudra Loan be availed for?

Drop line overdraft or working capital loans or overdraft facility is provided to business groups and rural businesses.

Application process to avail Mudra Loan

To apply for Mudra Loan for all the categories, you will have to go through the following process:

The borrower who wishes to take a loan under the Mudra scheme must visit the closest private or the commercial bank.

The borrower will have to present the business idea with the loan application form along with the other documents required.

Borrower will then have to fill up all the formalities as per the bank instructions.

The loan will be sanctioned and made available after all of the above steps are completed.

Documents required for Mudra Loan

If the borrower wishes to take a vehicle loan under the Pradhan Mantri Mudra Yojana (Mudra Loan), he must submit the following documents:

The Pradhan Mantri Mudra Yojana application form that is duly filled.

Vehicle loan application form that is duly filled.

2 passport sized photos of the borrower.

Photo identity proof and address proof and income proof.

Last 6 month’s bank statement.

If the borrower wishes to take a business instalment loan under the Pradhan Mantri Mudra Yojana, he must submit the following documents:

Pradhan Mantri Mudra Yojana application form and Business Instalment loan application form that is duly filled.

Photo identity proof and address proof.

Proof of establishment.

Last 6 month’s bank statement.

Ownership proof or office and residence.

Proof of continuity of business.

Qualification proof.

Trade references.

If the borrower wishes to take a Business Loans group and rural business credit under the Pradhan Mantri Mudra Yojana, he must submit the following documents:

Pradhan Mantri Mudra Yojana application form and Business Instalment loan or Rural Business Credit application form that is duly filled.

Photo identity proof, age proof and address proof.

Ownership proof of residence or office.

Business vintage proof.

Last 12 month’s bank statement.

Last 2 years Income Tax Return document.

Pradhan Mantri Mudra Yojana (Mudra Loan) Application form

The following details will have to be filled in the Pradhan Mantri Mudra Yojana (Mudra Loan Bank) application form:

Enterprise name and category has to be mentioned for office use.

Business information:

Name of the enterprise

Constitution if it is proprietary, partnership firm, private limited firm, limited company or if it is any other firm, then it has to be specified.

Current business address

Telephone and mobile number

Email address

Business activity that is existing and proposed.

Date of commencement of business

The registration number of the business

Registered office address

Social category that is either SC, ST, OBC or Minority community. If it is a minority community, then it must be mentioned.

Information about the proprietor:

Name

Date of birth

Sex

Residential address

Mobile number

Academic qualification

Experience in years

ID proof and ID proof number

Address proof and address proof number

PAN card or DIN number

Relationship with the officials or director of the bank, if any.

Names of associate concerns:

Name of the associate concern

Address of the associate concern

Bank that the associate concern is associated with.

Nature of the associate concern

Extent of interest as a proprietor, partner, director or investor in the associate concern

Existing banking or credit facilities

The following details must be filled:

The type of facilities allowed

Bank that the business is associated with

Limit availed

Outstanding amount

Security lodged

Asset classification status

Customer ID

Credit facilities proposed and the amount and the purpose and the details of the security offered must be mentioned in rupees.

In case of working capital, the actual sales and projected sales information has to be clearly mentioned.

In case of Term Loan requirement, the details of the machinery or equipment has to be provided. The details of the type of the machinery, purpose, supplier name, and cost of machine, contribution made by promoter and the loan required must be filled in.

The past performance and future estimates of sales, profit and capital must be mentioned.

Statutory obligations’ status has to be mentioned. The statutory obligations are:

Registration under Shops and Establishment Act

Registration under MSME

Drug License

Latest Sales Tax Return filed

Latest Income Tax Returns filed

Any other statutory dues that is outstanding.

The final part is the declaration, which requires you to pin up 3 passport sized photographs and the signature of the proprietor, partner or director, whose photographs have been affixed.

The borrower will get an acknowledgement slip that includes the following:

Application number

Date of application

Loan amount requested

Name of the applicant

Signature of the applicant

Signature and seal of the branch official

Mudra Bank Loan FAQs

What is the MUDRA/PMMY Scheme?

MUDRA stands for Micro Units Development & Refinance Agency Ltd, and PMMY stands for Prime Minister MUDRA Yojana. Mudra is being established as a government refinancing and development institution and was announced in the Budget 2016-17. The scheme aims to give funding for non-farm and non-corporate small business entities through intermediaries that include almost all Banks, NBFCs and MFIs operating in India.

What is the purpose of Mudra Scheme?

Financial support has been found to be lacking for the Non-Corporate Small Business Sector (NCSB) which employs more than 120 million Indians. With 90% of the sector out of the formal finances sector, the informal sector has always been marginalized in the country. The Mudra initiative from the Government of India aims that bridging the gap for financing of NSCB initiatives. Currently, the Mudra falls under SIDBI with plans for enactment of a law for Mudra Bank in the future.

Who will be targeted under the Mudra scheme?

Mudra will be tasked with refinancing needs of NBFCs, trusts, societies, co-operative societies, section 8 companies, scheduled commercial banks, small banks and other rural banks that provide financing to small and micro business entities that are involved in services, trading or manufacture verticals.

What does Mudra offer?

Mudra offers three different loan schemes:

Shishu: loans up to Rs.50,000

Kishor: loans above Rs.50,000 and up to Rs.5 lakhs

Tarun: loans above Rs.5 lakhs and up to Rs.10 lakhs

When does the Pradhan Mantri Mudra Yojana (PMMY) come into effect?

All loans up to Rs.10 lakhs that have been sanctioned after 8th April 2015 and for income generating activities other than farm related fall under the PMMY loan scheme.

Who should I approach for Mudra loans?

The scheme has been released by the central government and different financial institutions are tasked to provide the loans as intermediaries. These include Public Sector Banks, Cooperative banks, Regional Rural Banks, Foreign Banks, Private Sector Banks, NBFCs and MFIs.

Who oversees the operations under Mudra?

SLBC forum in each state and Department of Financial Services will oversee operations in the national level. A unified portal for Mudra has already been established for tracking achievement details of all financial institutions that are disbursing loans under the scheme.

What is Mudra Card?

The Mudra Card is a comprehensive benefits providing card that offers working capital through CC/OD whenever needed. The card functions as RuPay Debit Card and may be used for withdrawing cash at ATMs or for making purchases through Point of Sale machines. You can also credit money into the card as and when there is surplus funds so as to reduce the quantum of interests.

Who do I send grievance or feedback to?

Any grievance, complaints or feedback can be taken up with the respective bank/NBFC/MFI’s higher authorities such as zonal or regional manager.

A lending institution near my house has refused me loans under PMMY scheme. What do I do now?

You can escalate the grievance to higher authorities within the lending institution or approach any other bank/MFI/NBFC in your neighbourhood.

News About Mudra Bank Loan

Mudra Loan Target for 2015-16 Set At Rs. 1.8 Lakh Crore

Having crossed the target of Rs. 1.22 lakh crore for disbursement of Mudra loans in 2015-16, the government has set its target for the ongoing fiscal to Rs. 1.8 lakh crore. Speaking in the Rajya Sabha, Minister of State for Finance Santosh Gangwar said that in the last financial year, loans of over Rs. 1.37 lakh crores was given to the youth under the Pradhan Mantri Mudra Yojana. Around 79 percent of the recipients were women, he added. Earlier, Finance Minister Arun Jaitley had informed the RS that Rs. 1,37,449.27 crore had been given out to 3.48 crore borrowers across all age group by banks and microfinance institutions (MFIs) during the last financial year.

29th July, 2016

MUDRA Yojana increases Loan target

The Micro Units Development and Refinance Agency (MUDRA) scheme has increased its loan target for the Financial Year 2017, with the agency setting a target of Rs. 1.80 lakh crores. This is a huge increase from the target for last year, which stood at Rs. 1.22 lakh crore. A total of Rs. 1.33 lakh crores was disbursed under the scheme last year, with experts confident that they will beat the current target also. A total of Rs. 25,000 crores has already been disbursed in the first quarter. Available at both banks and microfinance institutions, loans up to Rs. 10 lakh can be availed under the scheme, with banks doling out loans worth Rs. 87,00 crore last year while MFIs paid out Rs. 46,000 crore. Women accounted for a major portion of loans, with over 80% of all loans disbursed to them, with new entities accounting for 36% of the loans.

20th July 2016

Loans up to Rs 1,100 Crore to be sanctioned by SC Corporation

Mr. Jupudi Prabhakar Rao, SC Corporation Chairman for the state of Andhra Pradesh recently announced that the corporation would be advancing loans worth Rs 1,100 crore to SC beneficiaries. The loans will be given under various schemes offered by the State in the current financial year and 60% of the loan would be provided as subsidy. Speaking at a meeting held at Ambedkar Bhavan to raise awareness, the chairman for the SC Corporation said nearly 45,000 SC beneficiaries benefitted from a total of Rs 1,100 crore in loans, which were extended last year. Following that example, the Corporation aims to sanction an equal amount in the current year as well. During the course of the meeting, the chairman also spoke at length about the multiple schemes which are being executed by the government towards the welfare of the SC/ST recipients. Also speaking on the occasion, Mr. Jupudi touched upon the fact that banks were failing to extend loans to SC/ST recipients in a timely fashion. To remedy this, he had previously approached the Chief Minister, Chandrababu Naidu, in this regard and sought his involvement in the issue and also seek his help to arrange a meeting with the state’s bankers to ensure action.

7th July 2016

'Last mile borrower' still not benefitting from MUDRA: CAIT

Traders body CAIT (The Confederation of All India Traders) has claimed that loan disbursal under MUDRA scheme is still not reaching the last mile borrower. This was said as one of the many concerns over loan disbursal under MUDRA scheme. It was noted that most of the Rs 1 lakh crore disbursed so far under MUDRA has been to existing borrowers and not reached the last mile borrower, for whom MUDRA was actually launched for. CAIT said this drawback has been highlighted to Finance Minister Arun Jaitley in the Parliamentary Standing Committee report on MSME Ministry. Further the body has suggested a more inclusive role of micro-finance institutions as well as non-banking finance companies.

Bhartiya Micro Credit (BMC) has distributed 5,100 E-Rickshaws under the Pradhan Mantri Mudra Yojna Scheme in addition to the 100 E-Rickshaws that were also distributed by Goenka Electric Motor Vehicles Pvt Ltd under the same scheme. Sanjay Goenka, MD of Goenka Electric Motor Vehicles Pvt Ltd, stated that the e-rickshaws will be financed by Mudra Bank and an installment of Rs 235 will be paid by the owners per day to the bank for two years. Chief Executive Officer of Goenka Electric Motor Vehicle Pvt. Ltd, Zafar Equbal, also stated that they were focused on promoting clean energy and environment friendly technology, by offering e-rickshaws at special prices under the scheme.

12th April 2016

AskMe Group to arrange loans for 10000 SMEs

By the end of the financial year of 2017, the Askme Group will be arranging loans worth of 1000 crore rupees for around 10000 small and medium enterprises. The said amount of loans will be arranged through tie-ups with non-banking financial companies like Mahindra Finance, Baja Finserv, Capital Float, Religare and few others. About 30 more lenders are to be added to this list by the end of April 2016. The loans will include capital working loans along with short-term funds, overdraft, loans against receivables and bill discounting facility. More than 15 million SMEs have been registered on the company’s online and offline platforms.

29th March 2016

Rural women gathered in number of 20,000 for an awareness programme

The State government is hopeful to bring together, women from 6 districts in Nagpur on 21st of this month. The number targeted will be around 20,000. They will be advised on schemes initiated by the government with regard to rural livelihood and skill development schemes at a daylong programme. The benefits of the National Rural Livelihood Management (NRLM), MUDRA loans will be provided in detail along with other grants as well.

17th February 2016

MUDRA used to fund entrepreneurs with over Rs.1 lakh crore

The MUDRA scheme, which follows a 3-tier lending system, has received funding from the RBI of Rs.1 lakh crore – which is to be directed towards deserving parties who wish to establish their own businesses and sources of income. The rural and low-income sector who did not previously have a means by which to establish their sources of sustainable income now have financial assistance through lenders who will fund them through the MUDRA scheme.

8th February 2016

MUDRA the key to unlocking the world’s largest non-aggregated, self-organised business ecosystem, if turned the right way

The CAIT (Confederation of All India Traders) suggests that MUDRA will only be fully effective if it is implemented in the way it was originally recommended. The MUDRA scheme was to operate as a financial institution outside the control of the RBI. The original implementation recommendation suggested that the common man need only approach MUDRA through the LMF (Last Mile Financiers) or through a MUDRA outlet, in geographies that bigger banks and lenders have not yet managed to penetrate. The demographic of lenders that the MUDRA scheme targets totally comprises the largest unorganised and under-funded business ecosystem in the world – rural India. If implemented incorrectly, the scheme could go haywire.

5th February, 2016

More than Rs. 93,600 Crore Sanctioned Under MUDRA Scheme

Under the Pradhan Mantri MUDRA Yojana (PMMY), around 2.26 crore borrowers have been sanctioned over Rs. 93,600 crore so far, said Minister of State for Finance Jayant Sinha. Out of this, Rs. 89,594 crore has already been disbursed. The PMMY offers loans between Rs. 50,000 and Rs. 10 lakh to small entrepreneurs. Three products are available under this scheme – Shishu, Kishor and Tarun, targeting the stage of development the business is in. Shishu offers loans of up to Rs. 50,000, Kishor covers loans above Rs. 50,000 and up to Rs 5 lakh, and Tarun provides loans of above Rs. 5 lakh and up to Rs. 10 lakh. Banks have been given a total disbursement target of about Rs. 1.22 lakh crore during 2015-16 for MUDRA loans.

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